Global Offshore Decommissioning Market – Insights
Offshore decommissioning includes the safe plugging of the matured and nonproductive wells in the earth’s surface together with the disposal of the offshore oil production equipment. This is a legal condition imposed under the Petroleum Act 1998 of the parliament of the U.K. Decommissioning is a rapidly growing sector in the field of petroleum business, with potential opportunities and few risks. Major drivers of global offshore decommissioning market are infrastructure aging and maturing oilfields especially in North Sea and Gulf of Mexico. Moreover, decline in crude oil prices are estimated to augment growth of the offshore decommissioning market. Risk involved and high cost for decommissioning are some of the factors restraining the global offshore decommissioning market growth.
Based on decommissioning services, the market is segregated into removal, disposal, remediation, and environmental studies; modelling and sampling; waste mapping and handling; impact assessment program and decommissioning plan; hazard identification study (HAZID) and safety screening, removal of equipment with NORM (Naturally Occurring Radioactive Material); stress analysis, lifting and rigging procedures; and transportation and sea fastening.
Furthermore, on the basis of process the offshore decommissioning market is segmented into Project management planning and engineering, permitting compliance regulatory compliance, platform preparation, well plugging and abandonment, conductor removal, mobilization & demobilization of derrick barges, mobilization & demobilization of derrick barges, platform removal, pipeline and cable decommissioning, and material disposal site clearance.
Among regions, in 2018, Asia Pacific held the significant position in the offshore decommissioning market. Major operators expected to carry out decommissioning in the Asia Pacific region include Petramina, CNOOC, Petronas, Royal Dutch Shell, and Chevron. The focus is expected to be on shallow water depth installations. Thailand, Malaysia, and Indonesia are host to mature shallow water installations and will be the key drivers for offshore decommissioning market growth in the region. Supply chain issues and lack of technological knowhow may hinder the fast tracking of decommissioning operations.
The global offshore decommissioning market was valued at US$ 5.96 billion in 2018, and is expected to register a CAGR of 5.4% in terms of revenue over the forecast period (2019–2027), to reach US$ 9.50 billion by 2027.
Figure 1. Global Offshore Decommissioning Market Share (%), By Region, 2018
Source: Coherent Market Insights, 2018-19
Europe accounted for the largest market share in the global offshore decommissioning market in 2018. The Europe offshore decommissioning market is majorly driven by presence of maturing oil and gas fields. Moreover, stringent government regulations in the European nations have allowed the market players to carry out safe and efficient decommissioning activities, which has driven the offshore decommissioning market in this region. Several market players have undertaken steps such as new product launch and contracts signings to successfully carry out decommissioning on their oil fields.
The Oil Spill Prevention, Administration, and Response (OSPAR) Commission is a convention that aims to protect the marine environment of the North-east Atlantic. As contracting parties to the OSPAR Convention, the U.K., Norway, Denmark, and The Netherlands are committed to OSPAR Decision 98/3, which requires all offshore structures to be removed during decommissioning.
In 2018, North America held the second largest share in the global offshore decommissioning market with the U.S. being the major contributor, owing to burgeoning decommissioning activities in the Gulf of Mexico. Increase in number of decommissioning of the oil and gas fields in the Gulf of Mexico and the stringent government regulations on safe decommissioning are the major drivers propelling the growth of offshore decommissioning market in this region. For instance, general requirements for decommissioning are specified through the U.S. Code of Federal Regulations and are enforced by the U.S. Department of Interior through the Bureau of Safety and Environment Enforcement (BSEE).
Figure 2. Global Offshore Decommissioning Market Share (%), By Water Depth, 2018
Source: Coherent Market Insights, 2018-19
Based on water depth, shallow water contributed for the largest revenue share of around 66.0% in 2018, in the global offshore decommissioning market. Aging structures in the shallow North Sea and the U.K. continental shelf is likely to propel the demand for decommissioning in the near future. Structures in the North Sea are typically heavier and were not designed by keeping into account the decommissioning cost. Hence, decommissioning these heavier structures requires significant planning and equipment, which ramps up cost.
Major players operating in the global offshore decommissioning market include, Acteon Group Limited, Topicus Finan BV, AF Gruppen ASA, Tetra Technologies Inc., Allseas Group S.A., DeepOcean Group Holding B.V., John Wood Group Plc, and Exxon Mobil Corporation.